Matters:

The company released its 2024 semi-annual report, achieving revenue of 11.796 billion yuan, a year-on-year increase of 10.85%, net profit to mother of 0.661 billion yuan, a year-on-year increase of 0.94%, and net profit after deducting 0.556 billion yuan, an increase of 3.4% year-on-year.

With 2024Q2, the company achieved revenue of 6.721 billion yuan, a year-on-year decrease of 14.84%, and net profit to mother of 0.356 billion yuan, a year-on-year decrease of 59.57%.

Ping An's point of view:

Fan shipments increased year-on-year, and profit levels are still under pressure. In the first half of 2024, the company's fan sales were 4.01 GW, up 16.09% year on year. Among them, onshore fan shipments were about 3,487 MW, up 18.84% year on year, and offshore fan shipments were about 520 MW, up 1.96% year on year. In the first half of the year, the company added 9.73 GW of fan orders, an increase of 28.36% over the previous year. As of the first half of the year, orders for hand fans were 45.36 GW, an increase of 5.73 GW over the beginning of the year. Sales revenue of fans and related accessories was 7.922 billion yuan, with a gross profit margin of 7.69%, down 6.56 percentage points from the previous year. It may be mainly affected by the decline in fan prices and the relatively low share of sea breeze shipments, but there was a marked increase in the gross margin of the fan business compared to the second half of 2023. We judge that the fan business is still in a state of loss, but there is a trend where losses are narrowing.

Significant progress has been made in new fan product development and overseas market expansion. In terms of large-scale fans, up to now, the company has launched large megawatt wind power products such as the MYSE18.X-20MW offshore wind turbine, 143-meter offshore wind turbine blades, and the MySE11-233 onshore wind turbine. Among them, the mySE18.X-20MW offshore wind turbine is the largest stand-alone marine wind turbine with completed prototype hoisting in the world. The company has completed the assembly work of the “Mingyang Tiancheng” floating wind power platform with the largest single capacity in the world, and is being towed to the Yangjiang Qingzhou Sihai Wind Project for installation and grid connection. The unit is expected to drastically reduce the investment cost of floating sea wind and promote the accelerated development of floating offshore wind power. In terms of internationalization, the company has made a major breakthrough in the European offshore wind power market. According to a report by the China Wind Energy Association, the company reached an MOU with the Italian government and Renexia, and has become the preferred fan supplier for the German Waterkant offshore wind power project. It is expected to achieve a breakthrough in marine wind power orders in the German and Italian offshore wind power markets. According to the company's forecast, the cumulative delivery volume of overseas fans will reach more than 4 GW in the next three years, and global business and potential orders will exceed 2 GW by the first half of the year.

The power plant business is progressing steadily, and the pace of transfers is expected to accelerate. The operating revenue of the power plant in the first half of the year was 0.975 billion yuan, up 17.03% year on year, and the gross profit margin was 64.80%, up 0.48 percentage points year on year. As of the first half of the year, the installed capacity of the new energy power plants in operation by the company was 2.71 GW, an increase of about 0.15 GW over the beginning of the year. The company's sales revenue for power plant products in the first half of the year was 2.113 billion yuan, with a gross profit margin of 44.56%, which is estimated to be the company's main source of profit. Since 2024, the company has accelerated the pace of power plant transfers. The CITIC Construction Investment Mingyang Smart New Energy Closed Infrastructure Securities Investment Fund has been officially issued. The project is the first onshore wind power public REITs approved in the country and the first private enterprise wind power public REITs; according to the company announcement, the company plans to sell 100% of the shares of the wholly-owned subsidiary Kailu Mingyang Smart Energy Co., Ltd. and 100% of the shares of Naimanqi Mingyang Smart Energy Co., Ltd. to CGN Wind Power Co., Ltd., with transaction considerations of 0.96 billion yuan and 558 million yuan respectively; the transaction price is expected to be 0.96 billion yuan and 558 million yuan respectively; The revenue scale and profit contribution of the power plant transfer business are expected to increase significantly in the second half of 2024.

Investment advice. Based on fan price trends and the company's business conditions, the estimated net profit for 2024-2026 is 2.282, 3.44, and 4.607 billion yuan (original forecast values 2.038, 3.491, 4.583 billion yuan), and the corresponding dynamic PE is 8.6, 5.7, and 4.3 times, respectively. The company's offshore fans have an outstanding competitive advantage, leading the hydroamine, floating, international business layout, etc., and there is plenty of room for future growth, maintaining the company's “recommended” rating.

Risk warning. (1) Domestic offshore wind power development is affected by various aspects such as military and maritime use, and there is a risk that phased demand falls short of expectations; (2) there is a risk that the company's market share and profit level will fall short of expectations due to the worsening competition situation for offshore fans; (3) the risk that overseas trade protection will increase and the company's export business falls short of expectations; (4) there is a risk that the development of emerging businesses such as corporate heterogeneity and perovskite falls short of expectations.